Mortgage Forbearance. What does it mean?

Hippotecca Staff

Forbearance is when your mortgage servicer or mortgage lender allows you to pause, suspend, or reduce your mortgage payments for a limited period of time while you regain your financial footing. Forbearance as always been an option available when you are experiencing a financial hardship. Rather than getting behind on your mortgage payments, damaging your credit and possibly losing your home to foreclosure, a homeowner can request a temporary Forbearance from their mortgage servicer or lender. Because of the Coronavirus and millions of homeowners losing their jobs and income, mortgage servicers have become overwhelmed with mortgage forbearance requests. Keep in mind a forbearance does not forgive mortgage payments or interest owed on your mortgage loan. Once your forbearance period ends, the amount of interest owed on your mortgage loan during the forbearance period will be due.

Here are some common questions about Mortgage Forbearance and how it will affect you.

Is mortgage forbearance bad for your credit?

A lender can report a forbearance to the credit companies, but typically they will not report any missed payments as long as you follow the terms of the forbearance agreement. The forbearance shouldn't affect your credit score and is less damaging than a late mortgage payment, but it may be difficult to get approved for a new mortgage loan or refinance during the Forbearance period of your loan. A forbearance is a Financial Hardship, this hardship can be caused by loss of income or medical emergency. Your mortgage servicer can report your loan as in Forbearance, this does not affect your credit score, but will affect your ability to qualify for a mortgage refinance or new home purchase. If you CAN pay your mortgage payment it is in your best interest to make the payment.

How long is a mortgage forbearance?

Mortgage forbearance is intended to provide relief while you're dealing with a short-term financial problem, so it generally does not last more than one year. In some cases you can request a longer forbearance term. Stay in touch with your lender and keep them up to date on your financial situation.

How do I qualify for a mortgage forbearance?

Typically lenders will want a reason for the Forbearance request and Hardship. Your mortgage servicer will want to request your most recent mortgage statement, bank statement, income documents, and a break down of your monthly expenses. During the Coronavirus lenders are allowing more homeowners to apply for mortgage forbearance and granting the hardship request. If you have questions about forbearance visit your servicing lenders website to start the process.

What are people saying on social media about forbearance?

Get in touch with your mortgage lender if you have any forbearance questions and if you qualify.

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